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To many entrepreneurs their companies are their babies, their dreams, their passion. And yet there may be a time to let it go or at least relinquish some control of it. Such an instance might be when an early buyout offer is received.

A buyout is when another company offers to purchase a majority hole (51 percent or more) of a business, either in stock shares or partnership rights. When the deal is struck, the new owner can continue the business unchanged, but he or she could also merge it with another company, break it into parts or even disband it and sell off its assets. The point is you as the original business founder would lose control of the business decisions.

And as heartbreaking as that may sound, it may actually be the most financially beneficial situation possible. There is evidence to suggest that business owners typically come away with more money after an early buyout than they would have after multiple investment rounds. While the net worth of the company may jump after more investments, the original owners share may not grow and it may be more complicated to extract the pay off.

An early buyout can provide a business owner with a huge sum of money with which to start a new venture and potentially provide lucrative consulting opportunities. If the parent company decides to keep the original staff around, you can be free to promote the business and its aims without the stress of fundraising and financing.

Certainly this strategy works better for some companies than others, but if feel you have taken your business to a successful level and you have other ideas you would like to pursue, an early buyout may provide you with the cash and freedom to move on.


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AND received FOUR free Business eBooks worth $39.95!
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